Factoring companies are financial institutions that specialize in the business of accounts receivable financing and management. If a factoring company chooses to purchase a firm's receivables, then it will pay the firm a prenegotiated, discounted amount of the face value of the invoices Sopranzetti 1998 . A moral hazard problem develops when the seller's credit management efforts are unobservable to the factoring company Once the entire Box 6.3 Factoring as a Sale and Purchase Transaction...

Financial system stability in a broad sense means both the avoidance of financial institutions failing in large numbers and the avoidance of serious disruptions to the intermediation functions of the financial system payments, savings facilities, credit allocation, efforts to monitor users of funds, and risk mitigation and liquidity services. Within this broad definition, financial stability can be seen in terms of a continuum on which financial systems can be operating inside a stable...

The Objectives and Principles of Securities Regulation the IOSCO core principles of the International Organization of Securities Commissions is the key global standard for securities market regulation. The IOSCO bylaws state that the organization's members a will exchange information about their experiences so they can foster the development of domestic markets, b will work together to establish standards and improve market surveillance of international transactions, and c will provide mutual...

The design of policies to foster financial system stability and development has become a key area of focus among policy makers globally. This policy focus reflects the growing evidence that financial sector development can spur economic growth whereas financial instability can significantly harm growth and cause major disruptions, as was seen in the financial crises of the 1980s and 1990s World Bank 2001 .This focus also reflects the recognition that close two-way linkages between financial...

Analysis of stock variables in countries' sectoral balance sheets assets and liabilities of financial firms, non-financial firms, households, government, and sub-sectors of those sectors, as appropriate and the consolidated aggregate balance sheet for the country can help highlight inter-sectoral linkages and can provide valuable information on the adequacy of financial structure and on the potential for financial instability. The balance sheet analysis focuses on a the determinants and...

Countries with less-developed financial systems may need more attention with respect to medium-term development issues such as institution building and financial market development. Coverage of the financial sector in those countries may thus need to focus on specific aspects of financial sector development, including capacity of banking supervision the legal and regulatory framework for bank and non-bank institutions and payment systems credit information systems, enforcement of creditor...

This section provides the overall analytical framework for financial sector assessments, motivates the structure of the Handbook in terms of this framework, explains how the subsequent chapters fit into the overall framework, and presents a high-level summary of those chapters as a broad guide to policy makers and assessment teams. The objective of financial sector assessments is to achieve an integrated analysis of stability and development issues using a wide range of analytical tools and...

Financial soundness indicators FSIs are indicators of the current financial health and soundness of the financial institutions in a country, as well as of their corporate and household counterparts, and FSIs play a crucial role in financial stability assessments. FSIs include both aggregated individual institution data and indicators that are representative of the markets in which the financial institutions operate. FSIs are calculated and disseminated for use in macroprudential surveillance,...